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Large Deal Multiple Premium Lowest Since 2014


Large Deal Multiple Premium Lowest Since 2014

  • As we outlined in our previous analysis, franchisee valuations have been trending down.
  • What is of further interest is that franchisee valuation declines are most noticeable for the larger deals as evidenced by charts below (current premium is the smallest we have measured since 2014).
  • It is possible that stock market volatility has acted to erode demand from the large strategic buyers and private equity aggregators more so than smaller owner operators who are likely more focused on main street economic performance rather than Wall Street vagaries.   



  • Empirical evidence suggests that larger franchisee M&A deals in the chain restaurant space tend to trade at higher EBITDA multiples because of: (1) the benefits associated with controlling a market; (2) potential corporate overhead cost savings; and (3) better access to capital including the most competitive lending terms and private equity. 

Source: RR's Finance & Valuation Report (outline)


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Disclaimer of Liability: Although the information in this report has been obtained from sources Restaurant Research® LLC believes to be reliable, RR does not guarantee its accuracy. The views expressed herein are subject to change without notice and in no case can be considered as an offer or solicitation with regard to the purchase or sales of any securities. Restaurant Research’s analysis and opinions are not a guarantee of the future performance of any company or individual franchisee.  RR disclaims all liability for any misstatements or omissions that occur in the publication of this report. In making this report available, no client, advisory, fiduciary or professional relationship is implied or established. This report is intended to provide an overview of the restaurant industry, but cannot be used as a substitute for independent investigations and sound business judgment. Copyright 2019.



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